Noble Group may be cut to junk by S&P on liquidity concerns

[NEW YORK] Noble Group Ltd, the commodity trader battling criticism of its accounting, may have its credit rating cut to junk by Standard & Poor's on concerns about the company's liquidity.

The ratings company said in a statement Monday that it's placing its BBB-rating on Noble, the lowest measure for investment-grade debt, on review with "negative implications."

S&P said it aims to resolve the CreditWatch listing within three months.

"The liquidity position of Noble has deteriorated, in our view, because of a reduction in the Hong Kong-based commodity trader's adjusted readily marketable inventory and committed undrawn credit facilities," S&P said.

The comments from S&P come one month after Moody's Investors Service said it may cut its rating on Noble to junk if the trader's liquidity position doesn't improve in the next one to two quarters.

Noble shares have fallen 64 per cent in Singapore this year amid criticism from a group called Iceberg Research, whose members are anonymous, and investor concern that slumping raw-material prices would hurt its business.

Noble said last week it's confident it will be able to meet targets set by Moody's. In a statement issued Monday, the trader said it was confident that a series of transactions aimed at bolstering its balance sheet will allow it to retain its investment-grade rating.

'FUNDING OPTIONS'

"We are committed to raising capital through various funding options, including asset disposals and partnerships with strategic investors, to strengthen our balance sheet and enhance liquidity," Noble said.

Noble said earlier this month it posted positive operating cash flow in the third quarter for the first time in more than a year and that a turnaround in sugar prices could bolster performance in 2016.

"Our third-quarter achievements will continue into year-end, as we continue to deliver positive operating cash flow, reduce leverage and control working capital and costs," Noble said Monday.

BLOOMBERG